So you’re ready to take on managing rental property yourself. Rather than outsourcing every aspect, you’re prepared to learn how to manage rental properties.
Contracts, maintenance, & late fees can be a bit overwhelming as a new property manager but don’t let these tasks scare you away from becoming a savvy property manager.
Choosing to control your business directly is a big one, but it’s also very rewarding.
From setting up basic forms that you can reuse again and again to getting help from third-party services when needed, we’ve got the advice you need to succeed.
Today’s guide will walk you through how to set the right rent prices, find tenants worth your time, and even what to do when you face an eviction situation.
A Table of Contents for Managing Rental Properties:
- Step 1: Buy & Repair
- Step 2: Set Prices & Expectations
- Step 3: Rent Your Property
- Step 4: Check & Maintain
- Step 5: Collect Rent
- Step 6: Evictions
- Step 7: Accounting
Before We Get Started
Let’s discuss something important before we get into the heart of this guide.
While these steps are laid out in a specific order, it is possible that you may have to deal with some of the steps non-sequentially. Depending on how many properties you manage or your property specifics, you may find yourself working on Step 7 before you reach Step 3.
No guide, no matter how comprehensive, can give you an exact play-by-play of what you will have to do. Instead, use this guide as a general resource to help you work through different situations as they occur during your time as a property manager.
The first step of managing any investment or rental property is to buy the property and get it into good repair. If your property is not yet purchased or in rentable condition, these are the two things that you need to work on first.
Many factors go into buying the right investment property and repairing it to be profitable. Due to how many factors there are, this guide will not go into those details.
For more information about buying and repairing rental properties, check out these articles:
- 3 REAL ESTATE INVESTMENT TIPS FOR CHOOSING A RENTAL PROPERTY
- 7 WAYS TO INCREASE THE VALUE OF YOUR RENTAL PROPERTY
- LANDLORD’S GUIDE TO FLOORING IN A RENTAL PROPERTY
Once you have control of your rental property and feel that it is ready to be rented out, you still have one more important step to complete before you can start looking for tenants. It’s time to set up your rental prices and expectations.
Market Research In Area
Before setting a price, you’ll want to research the average rental price in the area and the number of rental properties available. It’s possible that you already did some of this research during the buying process.
Figure out the following:
- What is the average income in the area?
- What is the average family size?
- What is the average rental price?
- Does your location have any extra-special benefits (i.e., bus line access, easy highway access, off-street parking) that you can charge more for?
As you take in the other rentals on the market and the going rates, you’ll be able to appropriately price your rental property.
List of Tenant Requirements
In addition to deciding on monthly rent, you also need to determine what requirements you have for a tenant looking to move into your property. By having the ideal tenant already in mind when you begin advertising your property, you’ll have a better chance of finding them.
Consider the following tenant characteristics, keeping in mind that it is illegal to discriminate against tenants:
- Minimum income
- Smoking or no smoking?
- Employment requirement
- Credit score minimum
- Past rental history required?
- Number of references required?
Now it is the most exciting (and difficult) time of the rental process. It’s time to find new tenants to rent your property to!
You will need to advertise your property. Advertise everywhere that you can; paying for additional exposure will be worth it. Try using common home sites like Zillow as well as area-specific publications such as a community magazine.
Finding Good Tenants
Finding any tenant isn’t enough; you want to find good tenants.
Good tenants respect your property, pay their rent on time, and do not cause unnecessary problems. It can be challenging to learn how to discern a good tenant during the interview process, but this skill will be instrumental.
Use a rental questionnaire to help you find out if each potential tenant is a good fit. Remember that you must follow strict rules about what you can and cannot ask about during these interviews. Asking about race, disabilities, and family size are basic no-nos. Following fair housing rules is a requirement.
To find a good tenant, be sure to do the following:
- Confirm their employment location & income
- Do a credit and background check
- Call their references
- Call their former landlords
- Have one-on-one, in-person conversations with them
Even if you do all of these things, you might miss something that indicates a bad tenant. Because screening tenants can be tricky, you may benefit from hiring a third-party tenant screening service to help you analyze all gathered information to find the best tenants.
Writing & Reviewing Rental Contracts
Once you have a tenant in mind, it will be time to sign the rental contract.
If you’ve never set up a rental contract before, you will want to gather some great examples from online to set up your own.
Alternatively, hiring a local lawyer to ensure you don’t miss any crucial details is a great idea for your first few contracts. From there, you can work on your own.
Be sure to include information about rental payment timing, eviction procedures, maintenance details, and home rules in the contract. Additionally, be sure to disclose and collect a security deposit when finalizing the agreement.